STRATEGIC MANAGEMENT

Transcription

1 STRATEGIC MANAGEMENT

2 Belongs to military or perhaps to political campaigns but not in business. But now the term is used by both military and business virtually with the same meaning and application.

3 Colins Keith (1993) defined strategic management as concerned with determining the future direction of an organisation and implementing decisions aimed at achieving the organisations objectives. Gluek and Janch (1984) see it as a stream of decisions and actions which lead to the development of an effective strategy to help achieve corporate objectives.

4 Wheelen and Hunger (1992) define it as that set of managerial decisions and actions that determines the long-run performance of a corporation. It includes environmental scanning, strategy formulation, strategy implementation and evaluation and control. The study of strategic management therefore emphasizes the monitoring and evaluating of environmental opportunities and constraints in the light of a corporation s strengths and weaknesses.

5 Business Mission/Purpose: - The corporation mission is the purpose or reason for the corporation s existence. For every business to exist therefore, it has to have a purpose or mission. Examples include: University: Teaching and research Courts: Interpretation of laws and their application. Business: Product and distribution of goods or services. Objectives or goals: These refer to the broad, general and enduring statement of purpose, as significant end conditions or configurations the company wishes to reach e.g. profitability, shareholders wealth maximisation, survival, growth etc.

6 Strategies: - A comprehensive master plan which states how the corporation will achieve its mission and objectives. They are also used to describe the form of attack that will be carried out. Policies: They communicate Broad guidelines for making decisions and taking action. They serve as a link between formulation of strategy and its implementation. Examples of policies include: hiring, termination, discipline, drugabuse in personal matters.

7 Procedures: A system of sequential steps or techniques that describe in detail how a particular task or job is to be done. Rules: They state in precise terms what is to be done (action) or not done (non action) in the same way every time and it permits little or no individual discretion e.g. No Smoking.

8 Program: It is a complex of goals, policies, procedures, rules, task assignment, steps to be taken, resources to be deployed, or even changing the company s internal culture or restructuring the corporation to carry out a given course of action. Budgets: These are statements of a corporation s programmes expressed in numerical or monetary terms. They set standards for co-ordinated action and provide a basis for controlling performance to see that it is in conformity with plans.

9 The strategic management process consists of three stages. Strategy Formulation Strategy Implementation Strategy evaluation

10 Strategy Formulation: This includes developing: Business Mission Identifying an organisations external opportunities and threats Identifying an organisations internal strengths and weaknesses. Establishing long-term objectives Generating alternative strategies Choosing particular strategies to pursue

11 Strategy-formulation issues include: Deciding what new business to enter What businesses to abandon How to allocate resources Whether to expand operation or diversity Whether to enter international markets Whether to merge or form a joint venture How to avoid a hostile takeover.

12 At any rate strategy formulation decisions commit an organisation to specific products, markets, resources and technologies over an extended period by time. Therefore managers have the best perspective to fully understand the ramifications of formulating decisions; they have the authority to commit the resources necessary for implementation.

13 Strategy-Implementation: It requires a firm to establish annual objectives, devise policies, motivate employers, and allocate resources so that formulated strategies can be executed. It includes developing: A strategy-supportive culture Creating an effective organisational structure Redirecting marketing efforts Preparing budgets Developing and utilizing information systems and Motivating individuals to act

14 It is often called the action stage of strategic management. Implementing means mobilizing employees and managers to put formulated strategies into action. ] It is often considered the most difficult stage in strategic management It requires personal discipline, commitment, and sacrifice. Interpersonal skills are especially critical for successful strategy implementation. Strategy implementation activities affect all employees, and managers in an organisation. Every division and department must decide on answers to questions such as what must we do to implement our part of the organisation s strategy? and How best can we get the job done?

15 Strategy Evaluation This is the final stage in strategic management. All strategies are subject to future modification because external and internal factors are constantly changing. Three (3) fundamental strategy-evaluation activities are: Reviewing external and internal factors that are the bases for current strategies; Measuring performance; and Taking corrective actions.

16 Strategy evaluation is needed because success today is no guarantee of success tomorrow! Success always creates new and different problems; complacent organisations experience demise.

17 It aids the company in knowing what business it is in and how that business should be. It helps the top management to be aware of its changing environment. It helps organisations identify and formulate long-range objectives that include sales, profit, share of market and other factors that top management think are important and for which it seeks measurement of progress.

18 It helps in assisting managers in the allocating of discretionary strategic resources through capital budgeting techniques. It helps in guiding and integrating the diverse administrative and operating activities of the organisation. It helps in the development and training of future general managers.

19 Thank you for listening